Bipartisan Push Would Cap Federal Student Loan Interest at 2%

A bipartisan group of House members has filed a discharge petition to force a floor vote on the Affordable Loans for Students Act, a bill that would cap the interest rate on federal student loans at 2%. The petition is a procedural tool that lets rank-and-file members bypass House leadership and bring a stalled bill to the floor if 218 members sign on.

Federal student loan interest rates currently ranges from roughly 6.52% to 9.07%, and undergraduate rates rose this year.

At these levels, interest can outpace what borrowers pay each month, leaving balances unchanged or growing years after graduation. The petition forces members from both parties to put their position on student loan affordability on the record rather than letting the bill sit.

The Details

The Affordable Loans for Students Act (PDF File) was introduced by Rep. Jared Moskowitz (D-FL), Rep. Mike Lawler (R-NY), and Rep. Anna Paulina Luna (R-FL). Beyond the 2% cap, the bill would:

• Apply the lower rate retroactively to outstanding loans.
• Let the Department of Education adjust rates and refinance loans automatically, with no borrower opt-in required (borrowers can opt out).
• Allow consolidation of multiple Direct Loans after the change.
• Require annual reporting on how many borrowers had loans modified and how many are delinquent.

The original bill is backed by the National Association of Student Financial Aid Administrators (NASFAA), the American Council on Education, and the American Association of Colleges and Universities.

The Timing

The push lands as several One Big Beautiful Bill Act changes take effect. 

Starting July 1, new borrowers choose between a standard plan and the new Repayment Assistance Plan (RAP), Grad PLUS loans end for new borrowers, and Parent PLUS borrowing is capped at $20,000 per year and $65,000 lifetime per child.

The backdrop is rising distress: as of early 2026, about 1 in 4 borrowers were behind on payments and nearly 9 million were in default, a record.

In response to this effort, Protect Borrowers Executive Director Mike Pierce said in a statement, "One year ago, the One Big Beautiful Bill Act was rammed across the finish line gutting the financial support millions of families depend on to pay for college. Since then, costs keep climbing and a decent life has slipped further out of reach for working class and middle class families—including the nearly 9 million student loan borrowers who have fallen behind under Trump’s watch. This bipartisan effort to deliver student debt relief recognizes this new economic and political reality: families are under extreme financial pressure and something has to give. Making sure student loan borrowers are not being gouged on interest rates while the system is in chaos is the bare minimum."

How This Connects

We've covered how the One Big Beautiful Bill creates winners and losers. Despite the repayment plan changes and caps, interst rate reform has largely gone unchanged.  

A 2% cap would cut the cost of carrying federal debt across the board, but it does nothing about the loan limits and repayment overhaul already on the books.

It's also important to note that interest rate reform doesn't impact borrowers' monthly payments who use income-driven repayment plans, and it will only have minimal impact on future RAP plan borrowers - since unpaid interest is waived each month. It does have some effects on the potential for a future tax bomb for existing IBR plan borrowers.

Discharge petitions rarely reach 218 signatures, so the odds of a floor vote are still long. The more immediate effect is political pressure, forcing members to take a public stance as borrowers feel the squeeze. Watch the signature count and whether leadership responds with its own student loan proposal.

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